Good morning. Welcome to the Smith & Nephew Second Quarter and First Half Results Call. I am Deepak Nath, and joining me is Chief Financial Officer, Anne-Francoise Nesmes. I am pleased to report another strong quarter of growth. In Orthopedics, we’ve improved our underlying dynamics and are set up to accelerate growth in the second half. The momentum in sports medicine and advanced wound management has continued. So these results have given us the confidence to increase our full year growth guidance. We saw the moderation we expected in the U.S. after a very strong Q1, but that was more than offset by improving execution globally and the increasing ability of our organization to take part in stronger markets. Margin development in the first half was in line with our expectations, and this should represent the peak of the macro-driven cost pressures. In the second half, we expect a clear step-up in both trading margin and cash generation, as we drive productivity gains and start to bring down days of inventory. And importantly, we’re continuing to build the foundations for sustainable performance by delivering a 12-point plan. Overall, I’m pleased with the progress of the plan. And as with any initiative of this depth and breadth, there are varying degrees of completion, but most elements are either on track or ahead, and we’re already seeing the benefits coming through. Product availability in Orthopedics, was much better than it was on the back of our own operational improvements, although external supply interruptions and shortages continue to hold back overall group performance. Later on, I’ll share with you the updated KPIs on operations and how we’re positioned to convert those into better outcomes in the coming quarters. So our high cadence of innovation has continued right across the portfolio, and we’ve added new growth drivers in robotics and in extremities. We’re also pleased with our progress on a number of other initiatives, including order to cash excellence, pricing management and the pursuit of cross-unit – business unit deals in ASCs. For now, I’ll hand over to Anne-Francoise to take you through the detail of the quarter. Anne-Francoise?

Thank you, Deepak. Good morning, everyone. So I’ll start with the second quarter revenue, which was $1.4 billion, representing – dollars, representing a 7.8% underlying growth and a 6.6% reported growth. Performance was broad-based, with all business units and all regions contributing. I’ll come to the detail in a moment, but you can see that Orthopedics accelerated compared to Q1, and Sports Medicine and Advanced Wound Management continued to perform well. Looking by region, established markets growth has remained above historical levels. Our U.S. business grew by 6.3% following a very strong first quarter. Other established markets maintained their performance and grew 8.5%, with elective procedure volumes remaining at a high level across Europe and Asia Pacific. Emerging markets grew 11%, largely driven by recovery in China, where surgical activity returned to more normal levels after COVID outbreaks earlier in the year. I’ll now go into the detail of each business unit. Orthopedics grew 5.8% underlying. Growth in knees and hips reflected us lapping the impact of VBP. As a reminder, the lower VBP pricing from the tender was gradually implemented during the second quarter of 2022. So while China still reduced growth by around 2 points in knees and 4 points in hips, that headwind fall away for the rest of 2023. Other Reconstruction growth of 21% was driven by the ongoing adoption of robotics, and our installed base of capital is increasingly nicely across both hospitals and ASCs, passing 650 units in total with a growing funnel. And customers are showing their confidence in the platform by buying second and third CORIs in multi-system deals. The range of surgical applications is being recognized, with the majority of deals, including our hip software. Trauma and Extremities grew 2.5% on the line. This was the first quarter after lapping the…

Thank you, Anne-Francois. I’ll start with a reminder of the transformation that’s underway at Smith & Nephew. Firstly, we’re becoming a higher growth company, with a target of consistent 5%-plus growth by 2025. That’s more than in the past, and we have a clear path to get there. We’re fixing the foundations of Orthopedics, ensuring the continuing strength of sports medicine and advanced wound management, which are already outperforming and converting the increased R&D investment into innovation-driven growth. Each of these elements is a step-up from where we were pre-COVID, which contributes to building a more attractive growth profile than we’ve had in the past. We are also committed to driving profitability and returning our trading margin to at least 20% by 2025. We’re coming through a period of elevated macro pressures, and we’re rebuilding a margin through manufacturing and COGS optimization, productivity improvements and growth leverage. On Slide 21, the 12-point plan provides a detail of how we do this. We’re now approaching the halfway point of the 2 years, and Slide 21 is an overview of where we are today based on the milestone completion for each underpinning initiative. Taken as a whole, the plan is showing good progress. The varying stages of maturity reflect the breadth of the program, including some initiatives that could move forward immediately and others that by nature would need longer preparation, such as portfolio streamlining or manufacturing optimization. We are now well advanced with our work to rewire Orthopedics. We’ve refocused the commercial organization, simplified the [indiscernible] organization, introduced enhanced commercial processes and rolled out a new growth-oriented incentive structure. Our renewed demand planning process is in place and starting to bear fruit, and our asset utilization is moving in the right direction, which set turns now around 30% higher than at…

Hi there. Thanks for taking the questions. Jack Reynolds-Clark from RBC. So just starting with the revenue upgrade. Obviously, it implies a change in your assumptions around kind of growth through H2. Just wondering how much of that is coming from kind of your changes – changes in assumptions around market growth versus execution? Second question on pricing, I think you mentioned 2.2 percentage points of kind of leverage coming through on volumes and pricing. Wondering kind of how much of that is pricing? How much of that is kind of the result of your own pricing initiatives versus kind of generally more favorable pricing environment? Then on CORI, obviously helpful detail in your release around the CORI replacement. I’m just wondering what your utilization level of CORI is at the moment? I think last time you disclosed it was around 20%.

Yes. So let me talk about the revenue picture. Our step-up in the second half is reflects seasonality. But our confidence comes from the fact that our revenue growth has come across all of our business units. It’s Orthopedic, it was sports, so there’s room and we expect that to continue. So the primary driver for us, to increase our guidance is our own commercial execution. There is, of course, market tailwind, and that’s primarily an Orthopedics factor, and we expect to be able to better take advantage of that. As you’ll recall, we have not always been able to take advantage of that market tailwind in years past. So we expect to be able to better take advantage of that. But it’s fundamentally around commercial, execution that underpins that confidence and that step-up in growth in the second half of the year. Pricing is a component of that. We’ve been – it is one of the elements of the 12-point plan. Actually Anne-Francoise has been personally leading that particular initiative. So there – it’s about our reaction to inflation and our ability to kind of pass along some of that price on to our customers. But the more fundamental work we’re doing, is actually greater price discipline across our portfolio, and that work should persist well past the current inflationary period. So that’s really the more fundamentals of our commercial execution that we plan to improve. Around CORI, yes, please go ahead, Anne-Francoise.

Sorry to interrupt, because you referred to the 220 basis points. So we have seen – to what Deepak said, we’re referring to the second half, we have seen positive price momentum in the first half, and we’re continuing the strong discipline. We are not saying what the split is, but you can assume that there is a product pricing built in that, compared to the historic price deflation that we used to see. So we’re in positive territory for price and very successfully managing that.

And I give our teams a lot of credit for the discipline driving around that. And coming to your third question around CORI, we’re pleased with the utilization. So we’re interested not just in placement of CORI, right, the numbers of CORI are less important to me. What’s much more important is roll that CORI place in driving our Orthopedics business, driving our full portfolio, and that utilization I gave you the 20% number has only improved even further since that. So it is a key metric that we track. We don’t necessarily report on that every quarter. But as I’ve said in previous forums, it’s a means to an end. It’s the number of CORI placements as a secondary lever or of secondary importance to me.

Hi. Hassan Al-Wakeel from Barclays. I have three questions, please. Firstly, again on the management change, Deepak. We’ve clearly seen a lot of management change at Smith & Nephew over the years. I wonder if you can elaborate on why this is happening now, and particularly early on in your turnaround. And related to this, Deepak, do you remain confident on the medium-term margin that you’ve highlighted, given the significant ramp required beyond this year of – in excess of 250 basis points over 2 years? Secondly, the strength in knees looks to be driven O-U.S. with U.S. growth of 2.8% below some of the peers who have already reported. What do you put this down to and how do you consider the cementless knee ramp in the U.S.? And then finally, I’d love some commentary around how you see the U.S. environment and backlog, has the increased utilization peaked? And when do you expect a more normalized level of growth? Thank you.

Hassan, the first question on management changes. So these – on the one hand, I talked about the importance of building a strong foundation for our business and the move from a franchise to a business unit structure is a key part of that. What I’m trying to achieve is greater accountability, greater levels of accountability in the organization, speed of decision-making, remove inefficiencies, delayering the organization and simplifying how we operate. So those are some of the thinking behind the move from franchises into business units. And I believe in my experience, they will stand us in good stead over the long-term. In terms of the specific changes, some of those are associated with that move, but they’ve been independent things. So in wound, for example, Simon Fraser deciding to retire as a personal decision for him to retire, nothing to do with the organizational changes. So the appointment of Rohit Kashyap is a – as a result of Simon’s decision to retire. And I had previously talked about Brad Cannon, whose focus into Orthopedics, is a veteran of the industry with a long track record of success, given the scale of changes that we need to make in Orthopedics. I needed someone of his caliber, of his kind of track record focused solely on Orthopedics, and that has already yielded great benefits in terms of how we operate and the progress we’ve made on the transformation journey. So, each one of these changes has had a particular context around it. But taken together, I believe that we are much, much better positioned as a company. And one final point on that, which I mentioned in my remarks. In operations, we’ve assembled a team within operations that are drawn from the industry. It’s the first time we’ve had such…

Cementless knee.

Hassan, Cementless knee. Yes. So we are seeing sequential improvements in terms of growth with our LEGION and CONCELOC. We obviously have multiple offerings in cementless. The JOURNEY ROX construct is an important component to that. So we’re pleased with the progress. We obviously don’t break out individual product or family sales, but we’re continuing to see good uptake in that area. Yes. I knew there was a fourth one I lost track of that. So fundamentally, our growth assumptions or the guidance that we provide, are based on our improved and improving commercial execution. Our guidance that we provided over the midterm, does not assume some exceptional tailwind, right? It’s built on more or less normalized kind of macro factors or procedure environment. Having said that, we do see a tailwind. We saw that in Q1. We’re seeing that, obviously in Q2 to a lower level than in Q1. In terms of how long they persist or where they come from, whether it’s backlog or something else, we don’t really have the visibility to be able to call that, right, as a number four player in Orthopedics, as I’ve said in the past, where we’re going through the performance improvement program, it can be difficult to kind of sparse how much of it is you and how much of it is the market.

On CORI adoption, can you give us a sense of what proportion of those placements were in the ASC channel versus hospital? And more broadly, how did all those sales to the ASC channel fare during the first half?

Sure. So with the 12-point plan, we are about where I thought we would be at this point of the year, we called out 45%. It’s based on progress in each of the underpinning initiatives and kind of relative to the schedule that we’re on, right? So it’s built up on a combination of those initiatives. So 45% about where we expect it to be. I’m particularly pleased with – and as I said, there’s some – for the most part, we are either on track or ahead in terms of KPIs, and that’s true right across the board. Having said that, there are some areas that are better than others. In terms of where I’m pleased, pricing has cleared an area we call that as one of the elements of the 12-point plan, very pleased with the progress there. The order to cash initiative, very pleased with the progress that we’re making there. The cross business unit deals, which is the 12th element of the 12-point plan, both in terms of the volume of deals, the number of deals, I’m pleased with the progress that we’re making, right? We really are taking advantage of the opportunity we have in the ASC. So that’s the third one. Wound, we’re on track, I would say, against a fairly aspirational plan that we had around negative pressure. Product availability, there’s two components to it. It’s improving LIFR, which is really tied to replenishment of sets, right, in Orthopedics is how well are we replenishing the sets that are already out there. You see the progress that we’ve charted that’s good. The part that’s not good with that is, driving down the sales – the DSIs related to it. That has been slower, but we understand why it’s slower and fundamentally, it’s because…

Thank you. It’s Graham Doyle from UBS. Can I ask some questions on the margin? So the vehicle margin was kind of historically weak. And I know we have mentioned in the start of the year it would be H2 weighted, but it’s also kind of like a historic step up in H2. So was this genuinely what you’re expecting, or is it sort of the bottom of the range of what you’re expecting for the first half? When I look at Slide 18 and you’ve got the building blocks up, even if I add those building blocks, I’m not getting to much more than 17.5%. So are we just less optimistic maybe than the start of the year than...

Yes, do you want to take that?

Sorry, I was going to take this one. So clearly, our margins, as we’ve said in the statements, are in line with our expectations and as anticipated. And we said at the beginning of the year, that it will be the margins and the profitability will be H2 weighted. So what we’re expecting to see is the operating leverage, as you’re pointing out to Slide 18, coming through and importantly, returning to historical seasonality. So yes, the H1 margin is lower, but that was implied in our initial guidance, given that we are returning to historical seasonality and the productivity improvements we’ve always in the second half. So we’ve already made progress in terms of cost savings, restructuring. On top of that, we are unwinding the cost spend, the pre-selling and marketing that we’ve seen in the first half. So we were in line and tracking to what we said we would do.

And just to accentuate the point, when we say expectations, this is what our budget was go to. So we truly are on budget to H1 of the year. I think the point is, some of the favorability in revenue that we had ahead of our expectations didn’t necessarily translate into favorability in margin, and we’ve kind of given you the bridge around that. But truly, our budget was – as we came in.

Yes. Maybe if we just think about next year, it’s just a broader question. There is obviously a big step, as a standpoint in terms of margin to get towards that target. But what happens if the order market doesn’t grow? You’ve got a big backlog. You’ve got a tough comp. And I know there’s obviously the absolute amount revenue will still be quite high, but you’ve got to say – you’ve got to go from taking very little share in the U.S., losing share to taking a lot of share. Is that in the plan?

Yes. So as I reflect back to how our plan is constructed and what’s the anchor to our guidance, our guidance was built and our assumption was built on more or less normal Orthopedic volumes. So any tailwind we have is a bit upside, right? And so implied in that is share recovery. And here, I want to parse what that means. Over the last couple of years, we have lost share, not because we’ve necessarily been displaced from accounts, but because we’ve given up procedures, largely on the back of our failure to supply reliably, right? Recovering that share, though not easy, is easier than if you had to go back into accounts that – with a completely displaced one. I mean to put it simply, there are – surgeons that are already training our systems who have had to resort to other company’s products because we haven’t been able to supply as well as regularly as we should have been able to, right? So it’s that recovery that underpins the next couple of years. The second more structural component to that is our innovations, right? We have invested in R&D – in particular, in Orthopedics. Robotics is a big component of that, but it’s not just robotics, it’s cement-less, right. It’s in trauma, in extremities and in other parts of our portfolio. But let’s just take robotics, right. CORI, we have a high level of conviction around. What we are doing in the 12-point plan, is accelerating certain features and functionality that was previously contemplated in the pipeline, but not at the pace that we are bringing this out. And there, you see this, right. Every quarter, I talk about something related to CORI. And that just does – it didn’t just happen, it represents an acceleration of…

Veronika Dubajova from Citi. Your line is open.

Excellent. Good morning and thank you, guys for squeezing me in. I have two, please. The first one is just Deepak maybe, to follow-on a little bit on the competitive environment and how you are feeling about your performance in orthopedics? And maybe you can tie this also to the changes that you have made to the sales organization in the U.S. year-to-date. Obviously, when we look at the growth rates, clearly, the gap between you and the peers has narrowed this quarter. I appreciate there is a lot of comp effects in there and noise. But do you feel you are starting to make progress versus where you were 12 months ago? And I guess maybe just talk to how the commercial organization changes, including the training program and the restructuring you have done year-to-date fits into that and really what your ambition is, as you move into back half of the year and into 2021? And then I have a follow-up after that. But maybe we can start there.

Yes, sure, Veronika. Thanks. So, first off, I mean the headline answer is, I feel good about where we are. As you correctly note, the gap relative to competitors, at least the – we were ahead of one of them. We have narrowed the gap relative to the other competitors reported so far, right. So, I am pleased with where we are, but this is, we are very much in the early stages of the improvement journey on commercial, right. You rightly note, the changes in the organization, the changes in commercial process. In the U.S., where our biggest challenge lies in terms of commercial performance in the U.S., we brought a lot of these together in Q2. It started in Q1 – actually, some of that – the seeds were sown back in 2022. They have come together in Q2. They have had impact very clearly yet, but the bigger impact is to come in the back half of the year and time beyond. As you know, in commercial, it’s not a switch that you turn on, right. You have got to make sure you lay the foundations. You make sure you are thoughtful about the changes you are making, and then of course, let the organization do its job. So, I do believe that we are well positioned now, having brought together the major elements, but the proof will be in the pudding and that will be best judged in terms of our performance here on out. But just to give you a sense of timing to accentuate it, a lot of these elements came together really in Q2, right. So, I do feel good about it. But obviously, the big part of the productivity or the improvements will come in the quarters that follow.

That’s very clear. And then maybe – and I apologize if this is – it might – the question might come across as aggressive, it’s not intended with that, but it’s definitely one that has come up a lot in my conversations this morning, which is that 1.1 percentage points of spend that you have called out in selling and marketing, was this always in the plan from the outset of the year, the nature of it, the spend of it? And I guess maybe just give us a background for why we had not heard about it until now? It’s clearly a surprise of the profitability in the first half of the year for all of us?

Yes, sure. I mean it’s – some of it was planned. So, for example, we had always planned to bring together our commercial organization for a longer period of time, than we historically do with much more intensive training than we do, and that’s all about the refocus and so forth, right. So, that was planned. The part that wasn’t is around commissions. So, we saw a couple of factors there that were to a higher level than we had originally planned for. So, for example, I called out supply chain interruptions. That’s a very, very real factor for folks in the field, right, whether in the orthopedics side, they are counting on sets to be delivered to drive growth. And when those sets aren’t complete, it really impacts their ability to go out and get new business, right. And so it’s a very real impact on the field. On the sports side, we have had quite a few challenges in being able to bring – to deliver products needed to drive growth. The teams have done a remarkable job selling through that. But there has been tremendous component shortages in sports, and we have had to make sure that we buffer to some extent, the organization from those challenges. So, those – that part of the selling spend related to commissions was to a higher level than we expected. In the back half of the year, a lot of these things are coming together because we have got line of sight to what we are able to produce. So, we won’t need those types of investments. So, to your point, some of it expected, some of it not so.

That’s fair and clear. Thank you, guys. I will jump back into the queue.

We can go back to the room, and then there is a couple of more questions on the phone line, I guess. So – good, one in the room.

Hi. Yes. David Adlington, JPMorgan. Three please. So firstly, on the supply constraints, just wondered if you were able to give some more color as to what they actually are. How much of a headwind were there overall, and when do you expect to resolve? Second one on free cash flow, just wondering if any guidance for the full year, whether you expect to be in positive territory for the full year or not? And then finally, just in terms of – on Chinese VBP, the sports medicine, are you expecting any destocking ahead of that? And if so, is that factored into the guidance?

Sure. So, do you want to take the free cash flow one?

Yes. So, in terms of free cash flow and cash conversion, as we guided with the full year results, the movements will depend on the inventory. And quite clearly, as we said today here, the drag on the cash flow has been increasing inventory. We are looking to address that and bring it back to a more reasonable level. So, we won’t be quite at historical level of free cash flow or trading cash conversion, but we are getting back – we will be getting back to near or approaching those historical levels, as we return inventory to a normal position, until we start decreasing, particularly with DSIs.

So, supply constraints, just to give you a little bit of color. On sports, we rely on basically third-parties to provide different components that go into the products that we make. We have had challenges as one or the other component for quite some time. Historically, it’s been semiconductors that’s really impacted our AET business in sports. That has improved from last year to this year, right. But what is – and resins was another area that I called out in times past, that has largely improved. Not as pre-pandemic levels, but improved relatively over last year. What hasn’t improved is, one or the other component, where it’s not some big categories, just an individual component related to a challenge that a particular supplier is having, either around labor or their own input raw materials. There are about six or seven of those today. There was a much longer list. We have whittled down to six or seven today that are really impacting the pace at which we produce. So, it’s reflected in raw material inventory because we have got the hundred other things that we need to complete it, but we will put the six or seven things that we are waiting on, the stuff sits in inventory, and it’s work in progress, and our field doesn’t get it in the way they are expected to see it. So, it’s those, call it, six or seven things, individual components in sports against the backdrop of improving kind of overall situation in semiconductor and resins, which was a topic last year for that business. In orthopedics, I want to draw a distinction between supply versus product availability. The reason we call it product availability in orthopedics, by far, the biggest challenge for orthopedics was us, our ability to connect operations…

Yes. Thank you for taking my question. My first one was just around, I guess your EBIT bridge into the second half of the year. I also had a couple of follow-ups on that. First one was just around the second half weighting of that EBIT bridge, is obviously higher even than the sort of pre-COVID levels. I know you sort of cited this at a historic seasonality, but just wondered if you could kind of touch on the second half weighting of the EBIT as a percentage that the overall group seems to be, I think 300 basis points, 400 basis points above what the previous kind of highs had been in terms of EBIT contribution as a proportion of the full year. And then just a couple around – just we had FX guidance, I think of 120 basis points transactional. Just where that sort of fits into your guidance in your 1H, 2H margin bridge? Is that included in the underlying numbers as part of that seasonal pickup? And then two sort of follow-ups, one was just on the profitability, I guess, the first half margins compared to a couple of years ago, you are 240 basis points, 250 basis points below where you were. I would just be curious in terms of from a divisional standpoint, where are you seeing kind of higher or lower margins versus 24 months ago by a divisional basis? And then a final one, if I can squeeze it in, just on your innovation pipeline, is any of that extra innovation sort of spend in R&D push costing you on the margin side? Thank you.

Do you want to take that...

Yes. Good morning Robert, there was quite a few here. So, in terms of the weighting of EBIT in the second half, you are right, I mean historically, it’s been 45, 47 to 53 and 55 in the second half. Here, given the pattern, it’s fair to say, there is a higher percentage of EBIT in the second half. A lot of that driven by returning to the seasonal uplift we have seen, but also the flow-through of the productivity improvement and the cost savings. So, that’s really what’s driving that proportion. The FX impact is throughout the various proportion, it shows through mostly in cost of goods, because that’s a disproportion where we have our U.S. cost base. I would say though, and that’s why we should recognize 120 basis points of margin erosion from FX we are absorbing. So, when we talk about at least 17.5%, it’s after quite a headwind in FX, and we should recognize that therefore, the efforts to improve margins are coming through. From the divisional or the segment reporting, clearly, there is a range and you can find the information. Of course, from an accounting perspective, it’s after allocating our costs, and with the facilities and actually allocating exchange rate, we are seeing good improvement in orthopedics. And to the earlier question, the improvement in the mid-term margin is mostly driven by the Orthopedics segment returning to be nearer to the historical profitability level we had, which is what we discussed in the full year results earlier this year. So, orthopedics is on track. We are seeing good improvement. Sports is improving. And when you look at the – there is a slight dilution in wound, because of the investment we are making behind negative pressure. So, all divisions are tracking very well. I am showing – being where we want them to be. And the final question on R&D margin, there is no further dilution of R&D. We have made a step-up in the R&D investment in ‘18 and ‘19. We have kept it through the COVID period. We are now in a right position, and that’s not dilutive to margin. So, I think I have covered all your four questions, but actually if you would like to know, so I asked Deepak, trying to memorize it.

Thank you very much. That was very helpful.

I am told there is one more on the line. Chris Gretler from Credit Suisse.

Hi. Good morning. Deepak, Anne-Francoise, thanks. I actually still have another three questions left. The first is just on the dressing business in wound care. Now, could you discuss that? It looks like at least from our perspective, that you are losing share there. So, could you maybe discuss how happy you are with the performance there? The second question would be on AETOS, on CORI? I think you mentioned that in your prepared remarks, could you maybe specify the timing when do you expect that to become available? And the third question is on – just on the cost inflation, given where we stand right now, how should we expect that go into ‘24, is obviously kind of easing substantially now in the second half, that headwind, maybe in order to just give you – if you could give us an indication there at the current levels, how that would impact your business? Thank you.

Sure. Maybe I will take the first two, and you can take the third one. So, in terms of – let me start with the second question, which is CORI on the shoulder. When do I – when would I want it, I would want it tomorrow, I had my brothers, but we have to sequence that in with the other CORI programs. We have made really good progress on knee. There is a couple more elements that are still coming on knee. There is a fairly robust pipeline of projects in hips that we need to prioritize. But I am quite excited about the applicability of CORI for shoulder, the anatomy of the shoulder, such that CORI is very well positioned to be – to play an important role in shoulder. We have recognized that opportunity. We have recognized that the form factor of CORI is well suited for the shoulder. So, it’s in place in terms of the pipeline. We just need to kind of factor in with other CORI programs we have in place. So, we will give you some visibility, a peek behind the curtain when we have the Meet the Management session in November. So, stay tuned for that. The first question now, Chris, just remind me, I just threw a blank there. AWC, yes, sorry, thank you. Maybe I should take notes. So, fundamentally about wound, it’s about our portfolio. You are right, there is some – with foams and dressings, you can parse this all different ways. But fundamentally, what I am actually pleased with is, how our portfolio in wound is performing. We have got the broadest portfolio in the industry. Not only is it broad, it’s actually quite rich in terms of what we have in each of our categories, right. So, our biologics portfolio is performing very, very well. Our skin substitutes business continues to be above market. This great data, clinical data that we have built up over a long period of time that’s fueling this growth. I feel very, very good about where we are positioned there. Negative pressures called out as a 12-point plan, a tremendous opportunity on the back of RENASYS, a refreshed portfolio there to drive really growth in that category. So, when I see those growth drivers line up, I do feel good. There is also quite a robust pipeline in wound, particularly around foams and dressing. So, I am very excited of what the future holds there. But when you add all of these things up, the story is one of each element of the portfolio plays its role, but it’s the totality, it’s the breadth and the richness that I am most excited about, is the source of our competitive advantage within that. In terms of cash, maybe you want to take that Anne-Francoise?

So in terms of cost to finish off, I mean clearly, as we said here today, we expect the cost pressures or the inflation to have peaked, and our mid-term guidance always assumes that moderate inflation in ‘24 and ‘25. What would I believe is of course, as you know, the cost inflation will unwind through the cost of goods line as we sell the inventory that we have built are higher costs. So, there will be a phasing of that effect as inflation comes down.

Thank you.

Okay, good. I am getting a note that we need to finish here, because our first meetings, I guess in a few minutes. So, I want to take this opportunity to thank everyone for coming. Thank you for your questions and your engagement. I am looking forward to coming back in the next quarter and continuing to show you the story of progress. So, thank you very much.